Question 1

If the number of employed increases while the number of unemployed does not change, the unemployment rate:
A) will increase.
B) will decrease.
C) will not change.
D) may either increase or decrease.

Accepted Answer

An increase in the number of employed individuals without any change in the number of unemployed individuals will decrease the unemployment rate, as the percentage of the total labor force that is unemployed will decrease.

Question 2

If the adult population equals 250 million, of which 145 million are employed and 5 million are unemployed, the labor force participation rate equals ______ percent.
A) 50
B) 58
C) 60
D) 67

Accepted Answer

The labor force participation rate is calculated as the number of people in the labor force (employed plus unemployed) divided by the total adult population. Therefore:

Labor Force Participation Rate = (Employed + Unemployed) / Adult Population

Labor Force Participation Rate = (145 million + 5 million) / 250 million

Labor Force Participation Rate = 150 million / 250 million

Labor Force Participation Rate = 0.6 or 60%

Therefore, the correct answer is (C) 60.

Question 3

A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bread for $6. The value added by the miller is:
A) $1.
B) $2.
C) $3.
D) $6.

Accepted Answer

The value added by the miller is the difference between the sale price of the flour ($3) and the cost of the wheat ($1), which is $2.

Question 4

In the United States since the end of World War II:
A) the labor force participation rates of both men and women have increased.
B) the labor force participation rates of both men and women have decreased.
C) the labor force participation rate of men has increased, while the labor force participation rate of women has decreased.
D) the labor force participation rate of men has decreased, while the labor force participation rate of women has increased.

Accepted Answer

Since the end of World War II, the labor force participation rate of men in the United States has generally decreased, while the labor force participation rate of women has significantly increased. This trend reflects various social and economic changes, including increased opportunities for women in the workforce and shifts in the types of industries dominating the economy.

Question 5

The household survey conducted by the Bureau of Labor Statistics provides estimates of the number of workers ______, while the establishment survey provides estimates of the number of workers ______.
A) self-employed; unemployed
B) unemployed; self-employed
C) with jobs; on firms' payrolls
D) on firms' payrolls; with jobs

Accepted Answer

The household survey conducted by the Bureau of Labor Statistics provides estimates of the number of workers with jobs, while the establishment survey provides estimates of the number of workers on firms' payrolls. This is because the household survey is a survey of households and individuals, which asks about employment status, while the establishment survey is a survey of employers and asks about the number of employees on their payroll.

Question 6

The labor-force participation rate is the percentage of the:
A) adult population that is employed.
B) adult population that is in the labor force.
C) labor force that is employed.
D) labor force that is unemployed.

Accepted Answer

The labor-force participation rate is the percentage of the adult population that is in the labor force, which includes those who are employed and those who are unemployed but actively seeking work. Option A is incorrect because it only considers those who are employed, while option C and D focus on the labor force rather than the overall population.

Question 7

An estimate of the number of unemployed workers in the economy can be obtained from:
A) both the household and establishment surveys.
B) from the household survey, but not from the establishment survey.
C) from the establishment survey, but not from the household survey.
D) from neither the household nor the establishment surveys.

Accepted Answer

The household survey provides information on the labor force, including the number of unemployed individuals, by asking households about their employment status. The establishment survey, on the other hand, collects data from businesses about jobs, hours, and earnings but does not directly provide information on the number of unemployed workers.

Question 8

The number of households interviewed in the monthly employment survey of the U.S. Bureau of Labor Statistics is approximately:
A) 6,000.
B) 60,000.
C) 600,000.
D) 6 million.

Accepted Answer

The monthly employment survey of the U.S. Bureau of Labor Statistics is known as the Current Population Survey (CPS). The CPS is conducted every month and samples around 60,000 households, making it one of the most comprehensive surveys on employment in the United States.

Question 9

The GDP deflator is a:
A) Laspeyres price index.
B) Paasche price index.
C) Laspeyres quantity index.
D) Paasche quantity index.

Accepted Answer

The GDP deflator is a Paasche price index because it uses the current year's quantities as weights, allowing it to reflect the prices of goods and services in the current year's consumption basket.

Question 10

An estimate of total employment in the economy can be obtained from:
A) both the household and establishment surveys.
B) from the household survey, but not from the establishment survey.
C) from the establishment survey, but not from the household survey.
D) from neither the household nor the establishment surveys.

Accepted Answer

Total employment in the economy can be obtained by combining data from the household survey (which provides information on employment status of individuals) and the establishment survey (which provides information on employment levels in businesses and organizations). Combining these two sources gives a more complete picture of overall employment in the economy.

Question 11

A woman marries her butler. Before they were married, she paid him $60,000 per year. He continues to wait on her as before (but as a husband rather than as a wage earner). She earns $1,000,000 per year both before and after her marriage. If GDP were changed so that it truly measured the sum of all final economic activity, the marriage would:
A) decrease GDP.
B) increase GDP.
C) leave GDP unchanged.
D) first decrease and then increase GDP.

Accepted Answer

The marriage would not change the sum of all final economic activity, so it would leave GDP unchanged.

Question 12

The panel of economists appointed by the Senate Finance Committee estimated that the CPI ______ inflation by approximately ______ percentage point(s) per year.
A) overestimates; 1
B) overestimates; 10
C) underestimates; 1
D) underestimates; 10

Accepted Answer

The Consumer Price Index (CPI) is often criticized for overestimating inflation, typically by a small margin such as 1 percentage point per year, rather than underestimating it or by a large margin like 10 percentage points.

Question 13

If an increasing proportion of the adult population is retired, then the labor force participation rate:
A) will increase.
B) will decrease.
C) will remain constant.
D) may increase, decrease, or remain constant.

Accepted Answer

The labor force participation rate measures the percentage of the working-age population that is either employed or actively seeking employment. If more people are retiring and leaving the workforce, then the proportion of the population that is not in the labor force will increase, leading to a decrease in the labor force participation rate.

Question 14

A woman marries her butler. Before they were married, she paid him $60,000 per year. He continues to wait on her as before (but as a husband rather than as a wage earner). She earns $1,000,000 per year both before and after her marriage. The marriage:
A) does not change GDP.
B) decreases GDP by $60,000.
C) increases GDP by $60,000.
D) increases GDP by more than $60,000.

Accepted Answer

When the woman marries her butler and he continues to perform his duties without receiving a formal wage, his services are no longer counted as part of the market transactions that contribute to GDP. Previously, his $60,000 salary was included in GDP calculations, but post-marriage, these services are considered non-market household production, which is not included in GDP. Therefore, GDP decreases by the amount of his salary, $60,000.

Question 15

The labor force equals the:
A) adult population.
B) number of employed individuals.
C) number of unemployed individuals.
D) number of employed and unemployed individuals.

Accepted Answer

The labor force includes both employed and unemployed individuals. It does not include individuals who are not in the workforce, such as students, retirees, or those who are not seeking employment. Therefore, the labor force equals the number of employed and unemployed individuals in the population who are able and willing to work.

Question 16

The employment statistics computed from the establishment survey do not include:
A) workers with two jobs.
B) the self-employed.
C) workers on firms' payrolls.
D) part-time workers on firms' payrolls.

Accepted Answer

The employment statistics computed from the establishment survey do not include the self-employed.

Question 17

According to the definition used by the U.S. Bureau of Labor Statistics, a person is not in the labor force if that person:
A) is going to school full time.
B) is temporarily absent from a job because of illness.
C) has been temporarily laid off.
D) is out of a job and looking for work during the previous four weeks.

Accepted Answer

According to the U.S. Bureau of Labor Statistics, a person who is going to school full time is considered to be not in the labor force. Therefore, option A is the best choice. Options B and C describe individuals who are considered to be temporarily unemployed and actively seeking work, so they would be considered part of the labor force. Option D describes individuals who are considered to be unemployed and actively seeking work, so they would also be considered part of the labor force.

Question 18

When prices of different goods are increasing by different amounts, the price index that will rise the fastest is:
A) Fisher's ideal index.
B) the CPI.
C) the GDP deflator.
D) a Paasche index.

Accepted Answer

The CPI, or Consumer Price Index, tends to rise the fastest among the options given when prices of different goods are increasing by different amounts. This is because the CPI is based on a fixed basket of goods and services, making it more sensitive to price changes in those specific items compared to indices like the GDP deflator, which reflects prices for all domestically produced goods and services, or the Paasche and Fisher indices, which adjust the basket over time or use a hybrid approach, respectively.

Question 19

A worker with two jobs is counted:
A) once in both the household and the establishment surveys.
B) once in the household survey, but twice in the establishment survey.
C) once in the establishment survey, but twice in the household survey.
D) twice in both the household and the establishment surveys.

Accepted Answer

In the household survey, individuals are counted once regardless of how many jobs they have, reflecting the number of employed persons. In the establishment survey, jobs are counted, so a person with two jobs would be counted twice, reflecting the number of jobs.

Question 20

According to the definition used by the U.S. Bureau of Labor Statistics, people are considered to be unemployed if they:
A) are out of a job, but not looking for work.
B) retired from the labor force before age 65.
C) do not have a job, but have looked for work in the past 4 weeks.
D) are absent from work because of bad weather or illness.

Accepted Answer

According to the U.S. Bureau of Labor Statistics, people are considered to be unemployed if they do not have a job, but have looked for work in the past 4 weeks. This means that they are actively seeking employment and available for work. Options A and B refer to people who are not actively seeking employment, and option D refers to people who may be temporarily absent from work but still have a job.

Quiz 2: The Data of Macroeconomics

If the number of employed increases while the number of unemployed does not change, the unemployment rate:

If the adult population equals 250 million, of which 145 million are employed and 5 million are unemployed, the labor force participation rate equals ______ percent.

A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bread for $6. The value added by the miller is:

In the United States since the end of World War II:

The household survey conducted by the Bureau of Labor Statistics provides estimates of the number of workers , while the establishment survey provides estimates of the number of workers .

The labor-force participation rate is the percentage of the:

An estimate of the number of unemployed workers in the economy can be obtained from:

The number of households interviewed in the monthly employment survey of the U.S. Bureau of Labor Statistics is approximately:

The GDP deflator is a:

An estimate of total employment in the economy can be obtained from:

The panel of economists appointed by the Senate Finance Committee estimated that the CPI inflation by approximately percentage point(s) per year.

If an increasing proportion of the adult population is retired, then the labor force participation rate:

A woman marries her butler. Before they were married, she paid him $60,000 per year. He continues to wait on her as before (but as a husband rather than as a wage earner) . She earns $1,000,000 per year both before and after her marriage. The marriage:

The labor force equals the:

The employment statistics computed from the establishment survey do not include:

According to the definition used by the U.S. Bureau of Labor Statistics, a person is not in the labor force if that person:

When prices of different goods are increasing by different amounts, the price index that will rise the fastest is:

A worker with two jobs is counted:

According to the definition used by the U.S. Bureau of Labor Statistics, people are considered to be unemployed if they: